Banking part 2
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Banking part 2
10Pass BookINTRODUCTIONA banker receives deposits on current and savings accounts from his customers. The customers arc allowed to withdraw the amount Banking part 2t from time to time needed by them through cheques or withdrawal slips from the account. The amounts deposited and withdrawn by each customer from time to time arc entered in a separate account opened in the name of rhe customer in the ledger account of the banker. Similarly, the transactions are en Banking part 2tered in a book and handed over to the customer for his reference and information. The entries made in the book also stand as evidence of the transactBanking part 2
ions between the banker and the customer. This book is known as ‘Pass Book’.Meaning of Pass BookPass book is an important book in rhe operation of a b10Pass BookINTRODUCTIONA banker receives deposits on current and savings accounts from his customers. The customers arc allowed to withdraw the amount Banking part 2 account in rhe bank’s ledger, as on a particular date. It is, in other words, a record of dealings between the customer and the bank. It is written by the bank from its own records. It is supplied by the bank to its customer free of charge. It is meant for the information of the customer. It indica Banking part 2tes to him the “state of his account” in the bank. The customer sends it periodically to the bank so that upto date entries may be recorded by the banBanking part 2
k. As it passes periodically between the banker and the customer, it is called a “Pass Book.” Every entry made in pass book is signed by a responsible10Pass BookINTRODUCTIONA banker receives deposits on current and savings accounts from his customers. The customers arc allowed to withdraw the amount Banking part 2use of photography to save the labour of writing statements of accounts. The photostat copies of the customer’s account arc sent to the customers for their approval.ỉ 98BankingObject or Purpose of Pass BookThe object of a pass book is to inform the customer from time to time the status of his accoun Banking part 2t as it appears on the books of the bank. It supplies evidence in favour of the customer in the event of the litigation or dispute with the bank. In tBanking part 2
his way, it protects the customer against the carelessness or fraud of the bank. The pass book also enables rhe customer to prepare “bank reconciliati10Pass BookINTRODUCTIONA banker receives deposits on current and savings accounts from his customers. The customers arc allowed to withdraw the amount Banking part 2f AccountSome bankers send periodical statements in duplicate to the customers showing the transactions of the banker with the customer. The customer is required to verify the statement and return one copy to the banker for having satisfied of the correctness of the entries. If any discrepancies arc Banking part 2 found in the statement, the matter is to be referred back to the banker.Some bankers also maintain loose leaves of the transactions of the banker witBanking part 2
h the customer. Photo-copies of the entries in the banker’s book are sent to the customer as authenticated copies of the accounts of the transactions.10Pass BookINTRODUCTIONA banker receives deposits on current and savings accounts from his customers. The customers arc allowed to withdraw the amount Banking part 2d credit in the accounts of the banker and the withdrawals will be debited. When rhe pass book is handed over to the customer, it amounts to a statement of account rendered by the bank.Is it necessary for the customer to examine the pass book? No, in India and United Kingdom, it is not obligator}' f Banking part 2or the customer to examine the pass book. He needs not discover any error or omission and draw the bank’s attention. On failure to examine the pass boBanking part 2
ok, he can’t be held guilty of negligence. But if the customer agrees to this by signing the form regarding the accuracy of the balance, it becomes an10Pass BookINTRODUCTIONA banker receives deposits on current and savings accounts from his customers. The customers arc allowed to withdraw the amount Banking part 2t without reference to the individual items.BANK OF INDIASavings Banks AccountName................Al'c No............DateParticularsDebitCreditBalanceInitials of Banks OfficialSpecimen of Folio of Pass BookPass Book199Legal Position of Entries in the Pass BookIt is difficult to define precisely the Banking part 2decisive legal effects of entries shown in the pass book. When it is issued to customer and if he does not raise any objection, obviously it becomes “Banking part 2
account stated” or “settled account” between him and the banker. But there has been a conflict of opinion regarding conclusiveness of the pass book re10Pass BookINTRODUCTIONA banker receives deposits on current and savings accounts from his customers. The customers arc allowed to withdraw the amount Banking part 2ord of the transactions between banker and customer, and it should be recognised as such.” He cites Daveyncss. Vs Noble case in support of his view. In this case, it was stated that on delivery of the pass book to the customer, he examines it and if there appears an error or omission, sends it back Banking part 2for rectification or if not, his silence is regarded as an admission that the entries are correct. In Vagliana Brothers Vs Bank of England, also it waBanking part 2
s held that “the return of a balanced pass book by the customer without comments amounts to settlement of account.” So, the return of pass book by the10Pass BookINTRODUCTIONA banker receives deposits on current and savings accounts from his customers. The customers arc allowed to withdraw the amount Banking part 2different. According to recent judicial decisions in England and India, the entries in the pass book cannot be regarded as a conclusive proof of their accuracy and as settled account. Any entry in the pass book is open to comparison and verification by customer. The customer can legitimately questio Banking part 2n the entries at any time whenever he notices them. The banker is bound to make the suitable corrections. The entries wrongly made or included may beBanking part 2
advantages cither to the customer or the banker. Both the parties can indicate the mistakes or omissions to get them rectified. So entries made upto d10Pass BookINTRODUCTIONA banker receives deposits on current and savings accounts from his customers. The customers arc allowed to withdraw the amount Banking part 2ok is returned to the bank by rhe customer without objection, the account cannot be regarded as settled account and it is not binding on both the banker and customer. In Mowji Vs Registrar of Cooperative Societies, Madras, it was stated that “the entries in the pass book can be regarded as prima fac Banking part 2ie evidence and not conclusive evidence.” Thus entries in the pass book arc not conclusive evidence of their correctness, in stating the position of cBanking part 2
ustomer’s account. They are subject to alternation on the basis of real facts.Effect of Entries in the Pass BookThe entries wrongly made or included i10Pass BookINTRODUCTIONA banker receives deposits on current and savings accounts from his customers. The customers arc allowed to withdraw the amount Banking part 2s favourable to customer, and (2) entries favourable to banker.1Entries Favourable to Customer: The account of a customer may sometimes show a wrong credit balance, which may be due to: (a) duplication of credit entries, or (b) crediting of higher amounts, or (c) omission of any debit entry or (d) c Banking part 2rediting the amount belonging to another customer.If any entry is made by bank in favour of the customer, the bank can rectify it by due notice to theBanking part 2
customer. The customer after such notice cannot withdraw such money. But as long as it is not corrected, the customer acting in good faith can rely2010Pass BookINTRODUCTIONA banker receives deposits on current and savings accounts from his customers. The customers arc allowed to withdraw the amount Banking part 2s Economic Bank, ir was held that “the pass book belongs to the customer and the entries made in it by the bank are statements on which rhe customer is entitled to act.”When the customer draws a cheque relying on a larger balance shown in the pass book by mistake, rhe banker has no right to dishonou Banking part 2r such a cheque. If he dishonours, he may be held liable to pay damages. In Holland Vs Manchester and Liver Pool District Banking Company Ltd., rhe cuBanking part 2
stomer’s pass book showed a credit balance of £ 70 and accordingly hedrew cheque for £ 65. The banker dishonoured the cheque on the ground of inadequa10Pass BookINTRODUCTIONA banker receives deposits on current and savings accounts from his customers. The customers arc allowed to withdraw the amount Banking part 2d that he is entitled to recover damages in respect of the dishonour of his cheques.”The banker cannot recover the money wrongly credited if the customer can show that in good faith and relying upon the accuracy of the entry he had been induced to alter his position. This point was decided in Skying Banking part 2 Vs Greewood. In this case, the hank wrongly credited the account of a military officer. The military officer relying on the pass book drew cheques inBanking part 2
good faith and spent the amount. When the mistake was detected, the bank saught to recover the amount wrongly credited. It was held that “the bank waGọi ngay
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